Month: July 2010

When your car is stolen or gets damaged in an accident, the repair or recovery cost is only part of the story. Going without your car while it’s being repaired can be a significant hardship. Without another vehicle available, your only recourse might be to rent one. The good news is that you might be able to buy insurance that will pay some of the cost of a rental; in fact, your policy might already include it.

The standard Personal Auto Policy OFFERS  a coverage called “Rental Car Benefit”. You must agree to and buy the coverage for it to benefit you when you need it.

In speaking to a group of local business people yesterday, we asked how many people in the room were dependent on their vehicle daily. EVERY PERSON raised their hand.

If you have purchased Collision coverage on your car and that car is damaged in a collision, this coverage will pay for “temporary rental car expenses.” The same applies if you have purchased Comprehensive coverage. If the car is damaged by something other than a collision, the policy will cover these expenses. The policy pays up to the limit per day you purchase, $30, $40, $50, up to a maximum of dollar amount, normally 30 days times your daily limit. This coverage may also apply to a vehicle to which you do not ordinarily have access, such as a friend’s car or a rented pickup truck.

Time limitations apply. If your owned or borrowed car is stolen, coverage begins a specified number of hours after the theft and ends when you are able to use the vehicle again or when the insurance company pays you for the loss. If the cause of loss is something other than theft, the insurance pays the expenses incurred more than 24 hours after you lose use of the vehicle. Finally, the insurance stops paying at the end of the period of time reasonably required to repair or replace the vehicle.

Some examples will illustrate how this works.

• >>> John has both Comprehensive and Collision coverage on his sedan. On Tuesday at 10:00 a.m., a frayed wire in the engine catches fire, resulting in major damage to the car. The car is in the shop for 15 days, so he rents a replacement for $35 per day. His insurance will pay $30 per day, starting with the expenses he incurs after 10:00 a.m. Wednesday. If 15 days is a reasonable time for these repairs, the company will pay for days two through 15.
• >>> John gets his sedan back. A month later, it breaks down. This time, he borrows his neighbor’s car. While he is driving this car, a deer runs in front of him; the ensuing collision badly damages the car. Because he has Comprehensive coverage, which applies to collisions with animals, his insurance again will pay $30 a day for him to rent a replacement while the shop fixes his car.
• >>> He gets both cars back and returns his neighbor’s car. A week later, he walks out of a store to find an empty space where his car should have been. He reports the theft to the police and his insurance company. The company will pay $30 per day, starting 48 hours after he discovered the car missing. It takes 35 days for him to find a replacement car; his insurance pays $900 (the maximum) for his rental costs.
• >>> Concerned about how much his insurance premiums will go up, he drops the Collision coverage on the replacement car. A month later, a bee stings him while he’s driving and he plows into a highway sign. This time, the company will not cover his rental costs because he had not purchased Collision coverage.

Not all Auto insurance policies are the same. Some might pay more than $30 per day for rental costs, but they will pay only if the insured vehicle is stolen. Others cover theft only and pay less than $30.

Check with one of our licensed insurance protection coaches often to find out what coverage you have and need. Call 877-994-6787 or 951-600-5751, we’re here to ensure that you have exactly the coverage you need.